QUICK NEWS, 3-22: THEY’LL SPEND ON WIND TO WIN THE FUTURE; OIL CONSPIRES AGNST WIND; SOLAR POWER PLANT PROGRESS; RUSSIA MOVES ON EMISSIONS MKTS

THEY’LL SPEND ON WIND TO WIN THE FUTURE
Wind Energy Investment of $65 Billion May Curb Fossil Fuel Use
Jeremy Van Loon and Alex Morales (W/Chris Martin, Todd White and Reed Landberg), March 21, 2010 (Bloomberg News via BusinessWeek)

"China WindPower Group Ltd., Iberdrola SA and Duke Energy Corp. will lead development of an estimated $65 billion of wind-power plants this year that let utilities reduce their reliance on fossil fuels.

"…Bloomberg New Energy Finance assumes a 9 percent increase in global installations of wind turbines this year, adding as much as 41 gigawatts of generation capacity. That’s the equivalent of 34 new nuclear power stations…Utilities that built natural gas-fired generators during the last decade are increasingly erecting turbines and buying wind power from competitors…as governments consider ways to penalize carbon-based fuels…[G]as-fired plants are relatively cheap to build and pollute less than coal plants…[but] still emit carbon dioxide, which will carry higher costs if governments tighten environmental rules…"

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"Last year, $63 billion was invested in turbines, adding 37.5 gigawatts of new capacity and bringing potential output of electricity from wind to 157.9 gigawatts…A third of those turbines were installed in China, which doubled its capacity to 25 gigawatts…Wind is gaining support as turbine costs fall and government stimulus money helps pay for the plants. Prices for turbines have declined by about 15 percent to 1.05 million euros ($1.44 million) per megawatt over the past two years…

"…[N]ew wind turbines may supply up to 12.3 million homes…Worldwide investment in renewable-energy, which also includes solar and biomass facilities, may top $200 billion this year after outlays fell 6 percent to $162 billion in 2009…That investment is moving ahead even after world leaders failed to reach a binding agreement limiting emissions from carbon-based fuels…This year, Duke plans to install 250 megawatts of wind equipment in the U.S…China WindPower will invest about HK$900 million ($116 million) in 10 to 12 wind farms this year, nearly doubling its capacity…Iberdrola SA’s clean-energy unit expects to add 1,750 megawatts of new capacity in 2010, most of that from wind power…"

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"Renewable energy sources may expand their share of the electric power generation market to 9 percent worldwide by 2030 from 2.5 percent now as gas use remains about 21 percent…Natural gas consumption has risen 20 percent since 2000…Coal, which produces the most carbon when burned, also is benefiting from rising energy demand. Its market share for electric generation will grow 3 percentage points by 2030 to 44 percent…

"Lower wind turbine prices mean more power for the same money, and developers are rushing to take advantage of $184 billion in economic stimulus money set aside for clean energy projects…Making wind power even more attractive is its “scalability,” or the ease with which a developer can add turbines as demand rises…[Wind is expected to reach grid parity] and be able to compete with fossil fuels without subsidies within four years…BP Plc, the world’s biggest oil producer, is investing in wind and solar power as renewable energy gains market share on fossil fuels…"


SOLAR POWER PLANT PROGRESS
US CSP market overview
Rikki Stancich, 12 March 2010 (CSP Today)

[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on Concentrating Solar Power (CSP) and the clean energy manufacturing tax credit:] "The manufacturing tax credit, (which so far is only ‘conditional’ – no money has actually gone out the door)…could help manufacturers bridge the way to building the bigger systems that are required in the US (unlike the smaller systems in Spain, due to the 50 MW cap)…So yes, it is likely to benefit US players seeking to build larger plants…Any new manufacturer needs to have a very deep balance sheet in order to be considered ‘bankable’ by the project finance community…[T]he investor appetite for new entrants is not very big, because there is already so much capital in play…"

[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on CSP and stringent environmental requirements:] "…[W]ithout the renewable portfolio standards, utilities would only be building gas…I’d be surprised if any new conventional power plants were built with wet-cooling in the US’ south-west…There is much more legwork in the permitting regime for solar thermal than there is for gas. The California Energy Commission’s permission process is based on that for gas and coal plants…"

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[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on CSP and stringent environmental requirements:] "[A] CSP plant has a much, much greater physical footprint, making the burden of site assessment much greater and more time-consuming…[T]here is not yet a standardized approach for calculating the environmental impact of solar thermal…[S]olar thermal developers are at a first-mover ‘disadvantage’; the challenge is that they have to deal with the permitting challenge on top of the huge challenge of developing a new resource. They have to establish a whole new set of processes to create that new resource…"

[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on solar power tower and parabolic trough technologies:] "…Theoretically, power towers have the highest heat and highest efficiency system, with the highest capacity factor…Power tower developers have been playing an intelligent game by incorporating performance testing as well as gaining performance guarantees from their development and technology partners, and utilities appear to be buying into this…But in terms of MW online, you now have PS10 (11MW) and PS20 (20MW) in Andalusia, then Brightsource’s SEDC test plant in Israel (4-6MW), and eSolar’s Sierra Tower (5MW) and then Torresol’s gemasolar plant in Spain (17MW)…[The parabolic] trough technology portfolio is larger."

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[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on US Air Force concerns about CSP mirror glare, sonic boom breakage and power tower flight pattern interference:] "…It could potentially become a real issue, given that there is not much room for negotiation when it comes to dealing with official departments such as the US Air Force…The tower height issue is a simple flight rule issue…[T]he Air Force [may] accept a tower that is 200 meters tall. I believe that there were visibility issues with the parabolic troughs…These issues may ultimately limit the potential field of available sites…But at the end of the day, a good developer will find a way to get projects developed."

[Nathanial Bullard, solar associate, Bloomberg New Energy Finance, on international standards for CSP and its components:] "Standards would certainly strengthen the ability for developers to sell the plants…But, as is the case in the PV sector…certain types of equipment are perceived by the industry as being bankable because of their sponsor, not because of a standard…Challenges in creating a standard would arise form regional disparities…At present, a strong sponsor tends to be the industry standard – a manufacturer with a proven track record…[W]hile developers may welcome competition as a means of driving down costs, the financial community tends to be less supportive of new entrants and would probably insist on using the larger, commercially proven manufacturer."


RUSSIA MOVES ON EMISSIONS MKTS
Russia to power into global carbon trading market
18 March 2010 (RT)

"Russia could gain 10% of the global carbon trading market in the next 3-4 years. But the need to invest in environmental projects and a forest of red tape is slowing he process.

"The market in pollution quotas is worth about $130 billion globally, with the European Union’s Emissions Trading Scheme estimated to account for about 65% of that."

Ironically, Russia's emissions are worsening even as it prepares to make a killing in the emissions markets. (click to enlarge)

"Russia is a special situation. It's not yet a market player, but has a huge reserve of unspent quotas – around 60 million tonnes of CO2…Under the Kyoto protocol, these "permits to pollute" were granted to aging Soviet-era plants. Many of these plants no longer exist, and the [~500 million tonnes of allowances] can be sold to other polluters, for cash [via the Un joint implementation mechanism]…

"…[I]t could earn Russia up to 40 billion euro in foreign exchange this decade. Russia's Sberbank will market a number of joint projects to reduce greenhouse gases…Russia can take a huge part [~10%] of the pie…"

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"So far, not a single project from Russia has been offered on the global market…[but will in] a matter of months…

"However the Kyoto protocol expires in two years – and last December's Copenhagen summit broke up without agreement. Russia and other developing countries argue strongly for keeping the old carbon quotas, and Sberbank is confident now's a good time to give the green light to carbon trading."